Is your CEO brilliant, a jerk, or both? Here's how to tell

The challenge for board members, investors, and employees alike is how to deal with these dominant visionaries who are often brilliant, unpredictable, difficult to work with, and sometimes downright mean. But it's also how to support the creative talent of brilliant new leaders while still maintaining the necessary structure, systems, and guidance that is required for effective corporate governance.

Dominant visionaries show up in new Silicon Valley startups and also in old established companies. They can be the CEO and founder, or they can be other executives who are not afraid to exercise their power. No matter what their origin or position, they are charismatic leaders with a disruptive vision. And their magnetic personality and story attracts investors, customers, and employees. They are all confident — but sometimes they have hubris and are overconfident.

The history of these eccentric visionary leaders is mixed. While some of these leaders soar and achieve great success, others crash and burn. When we look at the spectrum of these extraordinary leaders, we see brilliance combined with stubbornness and a penchant for breaking rules. Some of these firebrands start out acting as role models but then deteriorate into unattractive behaviors, sometimes turning into jerks or liars or both.

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Dominant visionaries typically use three ways to control their companies and we call this the aura of executive omniscience:

• Asymmetric power. Often dominant visionaries have almost total control over their boards. Boards are supposed to be independent, but in many instances the CEO is also chairman and is able to direct the outcome of all votes. In addition, dual-class ownership structures may provide the leader with absolute voting control.
• Cult of personality. Many of these leaders are visionaries with bigger-than-life personalities coupled with a story of how they will change an industry and maybe the world. They are quite persuasive and able to convince people to follow them. These leaders exude confidence and may bully people in pursuit of their vision.
• Opaqueness. By controlling the free flow of information, leaders are often able to block visibility to performance data that is critical to effective decision making and governance. When the board is not provided with information needed to govern and is shielded from a clear picture of company performance, governance is significantly harmed.

The presence of any of these three elements does not guarantee there will be a problem, but it is a clear signal there could be a problem.

Two important lessons emerged from our discussions with board members, extensive research, and experience dealing with the conundrums of multiple brilliant jerks:

1. The presence of an authoritarian trailblazer requires special handling. The traditional corporate governance principles are needed, but must be supplemented with additional practices. With an inspired and highly controlling powerhouse at the helm, boards, investors, and employees need to be ready for a different journey
2. The best actions to govern, thrive, and survive depend on the type of visionary you are dealing with. Dominant visionaries are not all the same. With some visionaries, there is a risk of getting in the way and curtailing the value they could create. With other types, complacency is a huge mistake. Left unsupervised, their behavior could destroy the company.

Our work is at the nexus of corporate governance and innovation and looks at how boards and others can best manage and work with leaders like Steve Jobs or Elon Musk and other dominant visionaries to maintain corporate control while not stifling innovation and creativity. This is the conundrum.

Marc J. Epstein, PhD was, until recently, Distinguished Research Professor of Management at Jones Graduate School of Business at Rice University in Houston, Texas, as well as a former professor at Stanford Business School, Harvard Business School, and INSEAD. Dr. Epstein has written extensively on corporate and nonprofit board governance, the role of boards of directors, organizational trust, and corporate accountability. He is the author of 20 books and well over 200 professional papers that have won numerous top academic, professional, and business awards. Connect with him via theconumdrumpress@gmail.com.

Rob Shelton is a globally recognized Silicon Valley–based consultant, author, and speaker on entrepreneurial excellence, breakthrough innovation, and scaling to drive rapid growth. Over the past 40 years, Shelton served as trusted partner and adviser to CEOs and senior executives at leading organizations in the valley and around the world. Connect with Shelton via theconumdrumpress@gmail.com.

Together, they previously collaborated (along with Tony Davila) on Making Innovation Work: How to Manage It, Measure It, and Profit from It (2006), a bestselling book from Wharton School Publishing. Their newest book, The Brilliant Jerk Conundrum, is available via Amazon and other fine booksellers.